Futures for US stocks fell on Tuesday, suggesting that markets are taking a breather after a bout of volatility in both stocks and bonds.
Futures linked to the S&P 500 fell 0.3%, pointing to a tepid retracement in the broad market index after it rose Monday on its best day since June. Futures linked to the Nasdaq-100 were down 0.3%, indicating declines in tech stocks after the opening bell.
Investors say their attention is focused squarely on central bank officials looking for clues on how monetary policy may change in the future. That will determine your appetite for government bonds and inflation-adjusted returns. An avalanche of easy money from the Federal Reserve since the pandemic struck last spring has helped moderate bond yields and fueled a rally in equity markets for much of the past year.
This phenomenon seemed to come to a halt in recent weeks: money managers adjusted their portfolios in anticipation of an economic rebound and a possible rise in inflation, prompting a sell-off of government bonds. Yields rose last week as bond prices fell, causing stocks to jitter. Since then, bond markets have stabilized and stocks rose on Monday.
“We are taking a breather after yesterday,” said Fahad Kamal, chief investment officer at Kleinwort Hambros.